Ten arrested in Salem food stamp fraud case

A Salem grocery store owner and nine of his customers were arrested in connection with a food stamp scheme that cost Oregon’s nutrition assistance program at least $120,000 during the past year, according to Salem Police.

Officers started watching Pantiaguas Produce on 1805 Silverton Road NE after a customer called to complain that an acquaintance stole the money off his Oregon Trail Card.

“He was upset because he said ‘I am trying to feed my family off that card,’ ” Lt. Steve Birr said.

When officers investigated the theft, they discovered a troubling pattern.

Birr said customers would enter the store with their Electronic Benefits Transfer cards and owner Holver Paniagua-Millan, 22, would do one of two things.

“If you had $160 on your card, he would swipe it for $160 and pay you $80 and keep $80 for himself,” Birr said. “Or he would keep the card, and go out and buy meat for his taco stand and then pay you 50 cents on the dollar for what he ran up on your card.”

Paniagua-Millan was earning about $5,000 per month from the scheme, Birr said.

About 800,000 Oregonians used EBT cards in 2012, said Gene Evans, spokesman for Oregon’s Department of Health Services.

The cards allow people to purchase only certain foods and household products from participating retailers. The state’s fraud team investigates individuals who either falsify information to obtain the cards or try to use them in an unauthorized manner.

On March 7, officers and agents from the U.S. Department of Agriculture decided to start making arrests. During a three-hour stakeout, they arrested Paniagua-Millan and four of his customers. Paniagua-Millan was charged with racketeering, five counts of computer fraud, five counts of food stamp fraud and three counts of identity theft.

Four other people were arrested later.

Retailer fraud — which is alleged in this case — is handled by the federal government.

“We make sure that people who are caught committing fraud are disqualified from the program,” Evans said.

Whether that disqualification is permanent or temporary depends on how much money a person stole and for how long a period of time he or she was stealing.

He pointed out that in 2012, less than one percent of food stamp recipients — about 4,000 cases — were caught using their cards fraudulently.

“We want to make sure that the people who are getting the benefits are the people who need them,” Evans said. “Incidents like this hurt the credibility of the program and people who need it.”

As for Pantiaguas Produce, Evans said the Department of Agriculture would decide whether to suspend the store’s ability to accept EBT payments.

“I can’t speak to what the outcome will be, but this wasn’t inadvertent,” Evans said. “This looks like intentional activity.”

Birr said there could be more arrests in this case as well as new investigations into other retailers.

“We are probably going to pursue more investigations with the Agricultural Department,” Birr said. “I think this is only the tip of the iceberg.”

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